Elgin may add tax to Otter Creek Retail Center

Shoppers at the Otter Creek Retail Center on Randall Road in Elgin may soon see an extra tax on their sales receipts.

City Council members gave preliminary approval Wednesday night for a feasibility study that would research the possibility of turning the shopping center into a business district. That designation would give the city the ability to charge up to 1 percent more for sales tax.

“This is the first phase to find out if this is even feasible,” said Elgin Assistant City Manager Rick Kozal. “If it is, we’ll come back to the council for guidance.”

Stelios Aktipis, who runs Otter Creek LLC, has been asking for the business district designation since 2009. When he first approached the city, state legislation said a property had to be in a currently blighted condition to qualify for business district designation. A 2010 amendment allows properties with the potential for future blight to qualify.

Aktipis bought the retail center a little more than four years ago and has put more than $4 million into the property to improve it. But he said there is still more to do.

Aktipis estimates the need for $3.2 million in infrastructure improvements that could come from an extra tax.

“We hope by turning it into a business district, we’ll have the possibility of really having the property reach its full potential,” Aktipis said.

Burlington Coat Factory, Hobby Lobby, Office Max and Fashion Bug are the major retailers in the shopping center. The Target that sits in that area is owned by a different developer and will not be included in the business district if the property gets the designation.

The study the council discussed will be paid for by Otter Creek LLC at no cost to the city. It will explore the possibility of getting the business district designation as well as detail the improvement projects Aktipis has in mind. Once the study is completed, the issue will come before the council again for final approval of any increased tax, which the city will collect. The council must also decide how much of that tax goes directly to the developer for improvements and how much, if any, the city keeps for itself.

Looking ahead, Councilman Richard Dunne aired his apprehension about an extra tax. “I’m concerned when our competitors are very close that that sales tax can be prohibitive to our business out there,” Dunne said.

Dunne and other council members hope for just that analysis in the study they preliminarily approved on Wednesday.